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Twenty-three major American financial firms – including Goldman Sachs, JP Morgan Chase, State Street, PNC Bank, and Wells Fargo – received over $95 billion in tax benefits from 2008 to 2015, according to a new study. Loopholes in federal policy lowered their effective tax rate from the headline 35 percent to below 20 percent – a reduction that increases the fiscal burden on everyone else.

The Institute for Taxation and Economic Policy examined taxes paid by 258 Fortune 500 corporations over the past eight years, and how these taxes compared to what would be paid if these companies paid the full corporate tax rate of 35 percent.

The institute found that these companies enjoyed huge tax subsidies that lowered their tax rates far below the 35 percent rate set in the law,.

The 23 financial firms in the study – including such major banks as Goldman Sachs, JP Morgan Chase, State Street, PNC Bank, and Wells Fargo – received over $95 billion in total tax benefits over the study period.

Some $69 billion of these tax benefits were received by just four highly profitable banks: Wells Fargo, JP Morgan Chase, PNC Bank, and Goldman Sachs.

A few banks, such as State Street and PNC Bank, paid tax rates well under 10 percent. We do not have the data to determine precisely which tax loopholes created these massive benefits, although the ability to move profits to lower-tax foreign jurisdictions likely played a role. But one tax loophole that clearly was highly beneficial to many financial institutions was the ability to write off the giant stock option payments made to their top executives.

Goldman Sachs, for example, reduced its 8-year tax bill by almost 20 percent just using this one loophole.

As large as it is, this tax subsidy of nearly $100 billion is certainly a major underestimate of the tax benefits flowing to the financial sector.

Only 23 financial firms were included in the study, because it was limited to Fortune 500 public companies that had made profits — and therefore had tax liability — over every year in the study period. This rule meant that major banks like Citibank, Morgan Stanley, and Bank of America weren’t included in the study, to say nothing of numerous other companies that were either private companies or too small to be included.

But on one topic (you’ll be surprised which), they actually agreed: Breaking up too big to fail banks. Both parties’ platforms include calls to re-instate the Glass Steagall firewall between boring banking (you know, lending money to people and businesses) and risky casino-style investment banking (think “credit default swaps”).

Election day is fast approaching and Congress’s approval rating has barely improved from a few years back when it lagged behind root canals. So you’d think agreement on a major policy — particularly one with broad and deep public support — might be occasion for swift enactment of a bi-partisan bill. Indeed, the 21st Century Glass-Steagall Act is championed by both Elizabeth Warren and John McCain, popular leaders in their respective parties. Instead, with Congress set to adjourn this week until after election day, Congressional leaders have yet to take a single step to live up to the words of their platforms.

Recently, a former SEC trial attorney has placed a bright spotlight on the failure of his old agency to charge more individuals at Goldman Sachs over securities fraud in the “Abacus” deal. Abacus was composed of mortgage securities that Goldman knew were toxic. But they packaged them up and sold to investors anyway, and then actively bet against those investors. It is a stark example of a serious conflict of interest.

Unfortunately, not only have the bankers responsible for the conflicted deals gone unpunished, but also the Dodd-Frank rule targeted at stopping material conflicts of interest remains unfinished. (For more on why the rule is important, see AFR’s 2012 letter).

Last week, Senators Feinstein, Merkley, Markey, Boxer, Franken, Durbin, Warren and Reed sent a letter to the SEC urging them to prioritize completion of this long-neglected rule. The letter highlights that the SEC is over 1,730 days late on completing this rule:

“The SEC was directed to issue rules no later than 270 days after the enactment of Dodd-Frank. It has now been over 2,000 days since the President signed Dodd-Frank into law. This is unacceptable. We urge you to work quickly to finalize strong rules implementing Section 621.”

The letter also highlights the problem with leaving Dodd-Frank’s conflict of interest rule unfinished:

“As you know, Section 621 prohibits material conflicts of interest for those involved in structuring asset-backed securities and serves as a critical component of financial reform based on the lessons we learned from the financial crisis. The U.S. Senate Permanent Subcommittee on Investigations’ April 2011 report on the financial crisis detailed some of the transactions that were designed to fail so that the entities constructing them could bet against them and profit. This is an appalling practice that the SEC can address by releasing a strong final rule on Section 621.

Financial institutions should not be able to sell securities to investors and then bet against those same securities, to purposefully design securities or structures with the intent that they will fail or with defective components, or to mislead investors by structuring products specifically intended to benefit an undisclosed entity. These types of structures are built on deception, and withholding material information is fundamentally contrary to the efficient operation of our financial markets and to the protection of investors.”

As the end of the year approaches, Wall Street lobbyists have been putting the “pedal to the metal,” trying to ensure that there are some holiday gifts for them wrapped up in the year-end spending bill. Just as they did last year, Wall Street is planning to jam dangerous and widely unpopular deregulation onto the “must-pass” spending bill. But many lawmakers have been pushing back, saying that it’s “cynical and corrupt.” From speaking out on Twitter to making speeches on the floor of the Senate, lawmakers have said NO to riders that roll back financial reform. Here is a compilation of some of their comments.

On September 16th, Americans for Financial Reform (AFR) joined Senators Elizabeth Warren (D-MA) and David Vitter (R-LA) for an event at the Cato Institute about reforming the Federal Reserve’s bailout authority. The discussion focused on the Federal Reserve’s unprecedented use of its Section 13(3) emergency assistance authority to provide trillions of dollars in low-interest loans to Wall Street banks during the crisis, as well as the new limits put on that authority in the Dodd-Frank Act.

Over the last few months, the CFPB announced enforcement actions against two companies that repeatedly targeted servicemembers with abusive products. The first company, Fort Knox National, and its subsidiary, Military Assistance Company, charged servicemembers recurring hidden fees by abusing a payment system many servicemembers use send money home or pay creditors while deployed. This process, known as the military allotment system, deducts payments directly from earnings. In this case, it also allowed the company to charge repeated, undisclosed fees to servicemembers’ accounts. The company also made it extraordinarily difficult to learn of these fees: online account information did not include fee charges, and monthly statements were not distributed. As a result, tens of thousands of servicemember accounts were drained of millions of dollars in fees. The CFPB is now requiring the company to pay $3.1 million in relief to the people they harmed, as well as to stop its deceptive practices.

The CFPB also brought an enforcement action against Security National Automotive Acceptance Company, an auto lender, for illegally threatening current and former servicemembers in order to collect debts. The CFPB is charging the company exaggerated the potential disciplinary action that servicemembers could face after failing to pay their loans; contacted and threatened to contact commanding officers to encourage repayments, threatened to garnish wages, and threatened borrowers with legal action. The Bureau’s lawsuit charges that the company violated the Dodd-Frank Act prohibitions on unfair, deceptive and abusive practices and it is seeking financial penalties, an injunction from further abuses and compensation for victims.

Because servicemembers and their families receive steady paychecks and have unique financial challenges such as lengthy deployments and frequent moves, they are all too often the target of predatory lenders and other financial fraudsters that congregate outside military bases.

With these two actions, the CFPB has now brought six enforcement cases against companies that have violated servicemembers rights. Those and other enforcement actions can be seen here. To date, more than 100,000 servicemembers have been helped by the Bureau’s work to protect servicemembers from financial abuse and the companies responsible have been hit with fines and restitution charges of over $100 million total.

On September 16th the Consumer Financial Protection Bureau announced that it is suing Corinthian Colleges over illegal predatory lending and debt collection practices. The CFPB’s lawsuit provides clear evidence that Corinthian used bogus job placement claims to induce students to enroll and take out costly private loans – loans the company knew most students would be unable to repay. The lawsuit demands an end to these practices, and forgiveness of more than 130,000 private loans made to students since July 2011, including more than $500 million in outstanding debt.

Given the overwhelming evidence that students enrolled and took on debts based on the corporation’s false and misleading claims, AFR members, including TICAS and NCLC, have welcomed the lawsuit. We have also wondered why federal loans to these students should not also be forgiven – something that would require action by the Department of Education.

With more than 100 campuses across the country, Corinthian is one of the largest for-profit, post-secondary education companies in the U.S. The CFPB’s investigation found that the school was making false and deceptive representations about career opportunities which led students to enroll and take out private loans with high interest rates. After loans were originated, the school was using illegal tactics to collect on those loans while students were still in school.

The Bureau’s complaint against Corinthian details a number of remarkably abusive practices, including:

Corinthian’s business model has been to target vulnerable potential student prospects, and mislead them both about the school and about the loans. A 2011 survey of campus operations showed that over 57% of students had household incomes of $19,000 or less, while 35% had household incomes of $10,000 or less.

Under federal law, for-profit colleges cannot receive more than 90% of their revenue from U.S. Department of Education aid. In order to meet this requirement and continue to operate off of DOE revenue, the school deliberately inflated tuition prices to exceed federal loan and grant limits, which created a “funding gap” so that students had to take out private loans. Corinthian then steered students toward private loans to fill gap that the school essentially created. These private loans, known as Genesis loans, added significantly to students’ debt burdens.

In marketing these private loans, Corinthian did not tell students that the college had a financial interest in them, when in fact it did. Corinthian then took aggressive action to collect on the loans, including pulling students out of class to publicly shame them for not paying back loans.

The loans had extremely high interest rates. In 2011 interest rates for Genesis loans were 14.9% with an origination fee of 6%, while interest rates for federal student loans were 3.4% to 6.8%, with a 1% origination fee. Corinthian continued to make these high-cost loans even though it knew that most students would have no way to repay them. To date, more than 60% of students with Genesis loans have defaulted on them within three years.

Corinthian lied about its job placement rate, in order to maintain accreditation and eligibility for Title IV aid, and induce students to enroll and take out its private loans. The college cited these falsely reported their job placement rates in marketing materials and in documents submitted to accreditors. At a Decatur, GA campus, school employees created fake employers and reported students as having been placed with them, increasing placements rates substantially. Corinthian also paid employers to temporarily hire graduates, with one campus organizing a company to employ graduates for two days at a health fair, and then counting those students as “placed” in order to increase placement rates.

Corinthian misrepresented how well students would do after graduating from its program to entice students into enrolling and incurring debt. The college trained its admissions representatives to pressure students who were also parents by telling them that enrolling in a program was their best or only chance to help their children. It also trained admissions representatives to falsely tell prospective students that classroom seats might not be available in the future, pressuring students to sign up immediately for classes and take on Genesis loans.

High-frequency trading, or HFT, is suddenly the focus of investigations by the New York State Attorney General’s office, the FBI, the Commodity Futures Trading Commission and the Securities and Exchange Commission. It’s also the subject of a best-selling book, Michael Lewis’s “The Flash Boys,” which has catapulted the issue onto 60 Minutes and The Daily Show, among other prominent media places.

High-frequency traders use privileged computer placement to gain access to exchange data milliseconds ahead of the pack; then they insert themselves between buyers and sellers in order to turn tiny price differences into high-volume profits.

Since the Flash Crash of May 2010, there has been much talk about HFT’s potential to destabilize the securities markets. The world has been slower to wake up to the more basic point that, even in the stablest of times, high-frequency trading is electronic highway robbery – a raid on the pocketbooks of investors and the credibility of financial markets.

Many people are attempting to try and pull apart these HTF strategies through using Paper Trading simulators, on websites such as bearbulltraders.com/simulator/. By not risking their own money, they are trying to figure how to trade with, and how to counter trade HFT algorithms and institutions.

Now, at last, the immoral and predatory nature of this activity is beginning to attract the notice of lawmakers as well as regulators, journalists, and talk-show hosts. Here’s something – one thing – Washington could do about it: enact a Wall Street speculation tax.

Because of the tremendous volume on which algorithmic traders depend, a very small tax on individual transactions – too small to make a noticeable difference to ordinary investors – would be enough to make high-frequency trading unprofitable. In addition, a speculation tax, or financial transaction tax, would raise significant revenue – hundreds of billions of dollars over 10 years, according to the Congressional Budget Office. It would collect that money from other high-volume Wall Street players, even as it incentivized them to slow down a bit, thus nudging the financial markets away from churning and short term gamesmanship toward more useful private and public investment.

That combination of benefits explains why a wide range of economists and other experts – including many notable figures from inside the financial industry itself – have come out in favor of the idea.

Eleven EU nations are moving towards the enactment of such a tax. In our country, speculation-tax bills have been introduced in both chambers of the 113th Congress. Iowa Senator Tom Harkin and Oregon Representative Peter DeFazio have joined forces to propose a .03 percent tax (that’s just 30 cents per $1000). Minnesota Representative Keith Ellison has introduced a bill calling for a significantly higher, but still modest, tax of 0.5 percent. Their efforts deserve wide and serious support.

New research from the Federal Reserve Bank of New York finds that the largest global banks – those perceived as being ”too big to fail” – enjoy a funding advantage that allows them to get loans more cheaply than their smaller competitors. Even more disturbing, this advantage seems to lead them to engage in more risky behavior, as measured by impaired and charged off loans.

Some have challenged these findings, by claiming that large non-financial firms also have lower borrowing costs than smaller firms; in other words, the argument goes, the funding advantage is not due to the ”too big to fail” perception of potential government support. But Santos’ research finds that large banks have a borrowing-cost advantage significantly greater than any advantage of large firms in other industries. As he states, his results “suggest that the cost advantage that the largest banks enjoy in the bond market relative to their smaller peers is unique to banks.”

In further research, Santos and coauthors Garo Afonso and James Traina find that the perception of ”too big to fail” status and an accompanying potential for government support appears to lead banks to engage in more risky behavior. Banks classified by ratings agencies as likely to receive government support have greater loan losses and a higher percentage of impaired loans, the paper finds, than do institutions that are not so classified. This suggests that banks take advantage of the implicit expectation of taxpayer support in the event of losses by pursuing higher profits through riskier lending. The possibility that losses from these loans could be transferred to the public leads to riskier bank behavior.

In a quiet victory for reform, the Municipal Securities Rulemaking Board (MSRB) has dropped its proposal to let big-bank employees serve as independent ”public” members of the Board. The MSRB cited “unexpected opposition” to its idea – opposition that came in significant part from Americans for Financial Reform and our member organizations.

Had the MSRB’s proposal gone forward, employees of bank holding companies would have been allowed to dominate this little-known agency, reversing a move towards greater public accountability mandated by the Dodd-Frank Act. The MSRB is supposed to be a first line of defense against the kind of abusive practices that, in the runup to the financial crisis, trapped hundreds of cities and towns in swaps deals and other forms of risky financing that required taxpayers to pay exorbitant fees to Wall Street. Prior to the financial crisis, the MSRB clearly failed to protect municipalities from these abusive practices or even to clearly warn public entities of the dangers of the exotic new financing structures being sold by Wall Street.

To bolster the MSRB’s integrity and effectiveness, the Dodd-Frank Act of 2010 called for a majority of board members to be “independent of any municipal securities broker, municipal securities dealer, or municipal advisor.” In July 2013, however, the board appealed to the Securities and Exchange Commission for permission to loosen the new rule so that it would no longer exclude employees of big banks and major dealers who were not directly involved in municipal securities work.

AFR and our allies opposed this change as fatally undermining the independence that the law called for. As we pointed out in an August letter to the SEC, “this proposal would permit a so-called independent Member to be a current employee or director of a corporate entity that includes a municipal securities broker, dealer, or advisor as a subsidiary or affiliate, so long as the individual was not a current or recent employee of the specific subsidiary active in the municipal markets. For example, a current employee of JP Morgan Chase Bank NA could qualify as a Public Member of the MSRB, simply because they were not currently employed by JP Morgan’s municipal securities broker affiliate.”

Organizations weighing in opposition included AFR members the Consumer Federation of America and AFSCME along with the National Association of Independent Public Financial Advisors and the Government Finance Officers Association.

Now that the MSRB has withdrawn its proposal to weaken the standards of independence, the next step is to make sure that members who genuinely represent the public interest, not the dealer interest in selling risky deals to public entities, are in fact appointed to the Board.

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This blog is maintained by AFR as a forum for ongoing news and commentary about the fight for effective financial reform. Blog posts represent the opinions of their authors / posters, and do not necessarily represent the views of the AFR coalition or coalition members.